Removing Barriers Blog

In August 2014, the Financial Crimes Enforcement Network (FinCEN) issued a
proposed rule to amend existing Bank Secrecy Act (BSA) regulations regarding
customer due diligence requirements for credit unions, banks, and related
entities. The CDD Proposal would also impose a new requirement under the BSA to
identify the beneficial owners of legal entity customers, subject to certain
exemptions. In a letter filed today, we reiterate
concerns with the CDD Proposal that we shared with FinCEN in October 2014.

In December 2015, FinCEN made available
a Regulatory Impact Assessment (RIA) related to the CDD Proposal. Today’s
letter also addresses issues with the RIA. Specifically, we question aspects
of the RIA, including its conclusion. Our primary concern with the RIA is that
FinCEN has taken the position that for the betterment of society as a whole,
financial institutions must absorb the additional regulatory costs associated
with the CDD Proposal.

As described in the RIA, “Although limitations prevent
us from fully quantifying all costs and benefits attributable to the CDD rule,
the U.S. Department of the Treasury is confident that the proposed rule would
yield a positive net benefit to society.”

FinCEN has concluded that the benefit
to all of society outweighs the cost to financial institutions. However, this
is a flawed approach to a cost-benefit comparison, since the costs of these requirements are essentially taxes on
financial institutions. Since credit unions are already paying for compliance costs related to prudential and consumer protection regulations, additional costs from this third regulatory regime are particularly burdensome.

Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.